Vol. 25, No.22 Week of May 31, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Paid message to Gov. Dunleavy and Alaska legislators from oilman Jim White:

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Jim White

The true backbones of Alaska are the Alaska Natives, pre-statehood residents and homesteaders that voted and created this great state. They are the forgotten real heroes of Alaska


Alaska has been a state the last 60+ years. Since Alaska became a state some 60 years ago, not one sole resident Alaskan has been able to explore or produce a single drop of oil or gas from his or her property. As a result, the immense wealth generated by Alaska’s oil and gas has gone outside the state rather than staying in the hands of individual Alaskans.

Something is terribly wrong with this “result.” So, let’s try to get to the heart of how we got here and what we can do to change it.

After buying Alaska from Russia coaxing more citizens to come to the new territory of Alaska to homestead became a strategic necessity for the defense of the lower 48 states of America.

Following world war II, the US government desperately needed to have more new settlers to come, reside and settle in the new territory of Alaska to attempt to provide needed local civilian contract personnel in Alaska and produce fresh food and milk to service the thousands of soldiers and sailors who were being stationed in the territory of Alaska that were providing the 1st line of defense to protect the lower 48 states from any threats of any foreign nation.

Since Alaska’s gold rush, the US had been trying to entice new citizens to come to the territory of Alaska. The US government promise to any new settler was that they could come pick a new homestead in the territory of Alaska. The US Interior Department rules were clearly understandable by any new Alaskan homesteader. If he or she lived on that homestead for two years and made certain improvements on the land, then they could keep the land and all the oil or gas that might be produced beneath it. That was how the Katalla Oil Field, Alaska’s first oil field, was developed and was the enabling fact that allowed the Kennecott Copper mine to profitably produce and sell Alaska’s copper for the next 30 years. To this day, this shallow oil field of wells less than 1000 feet deep is still owned by private citizens.

Many lower 48 citizens came up to the frigid new territory of Alaska to attempt to prove-up a new Alaskan homestead. These new folks soon found out living in the Alaskan brush was an arduous task that required some cash, but a whole lot of extreme physical work, extreme privation, and a lot of ingenuity just to prove up his new homestead and survive for the two year requirement. To be awarded a homestead they had to live in an area having few if any roads, few neighbors, a lot of big bears, and no electricity or running water. But they knew if they toughed it out, they would end up owning the land and everything below it to call their own.

This all changed when Swanson River Oil Field was discovered on the Kenai Peninsula in 1957. Suddenly there was a major push to stop any homesteader anywhere in Alaska from being able to own their oil and gas beneath their property. It took an act of congress to ensure that the pre-1957 homesteaders got to keep their oil and gas, but everyone else was out of luck. Those that homesteaded their property after 1957 did not even get to keep the gravel, much less the oil and gas beneath their land. The state government could clear the trees off their property and take the gravel if they needed it to build a road.

But the pre-1957 homesteaders were different; they owned the oil or gas beneath their lands ONLY IF they could get it to the surface and could cash in on it. The bottom line is this, if you cannot get the oil or gas beneath your property to the surface, you don’t frickin own it.

In the 1970’s the federal government only required a $10,000 bond to drill on federal lands. On homesteader’s land, the state of Alaska in its infinite wisdom set a bonding requirement that was ten times higher. Before any homesteader could even think about drilling even a shallow oil or gas well on their own land they would have to come up with $100,000 cash bond. How many homesteaders do you know had an extra $100,000 laying around in 1970? It is important to note that there are thousands of oil and gas wells in the lower 48 that produce from less than a couple hundred feet below the surface.

But wait, it gets even better. The state of Alaska has now raised the homesteader’s bonding requirement from $100,000 to $400,000! Even though the homesteader or their heirs technically own their oil and gas if they can get it to the surface, the high bonding requirements deprives them of their ability to get it to the surface where it can actually be sold and put into their bank account.

Another thing, the high $400,000 drilling bond cost is just another form of state-imposed taxation. Unfair taxation was the premise that caused the 1770-settlers of Boston to dump all its English tea into the Boston Harbor.

This is a double whammy! The land is already required by law to be pledged as collateral to pay all well plugging costs beneath his own homestead regardless, even if someone else had drilled the well. Even though there are only a couple of hundred of pre-1957 homesteaders, the state of Alaska bureaucrats who are pushing for higher bonding amounts are effectively throwing the homesteader who helped create this great state of Alaska under the bus.

The end result of these unreasonable excessive drilling bonds is that not one Alaskan resident has ever been able to produce or sell a single drop of Alaska’s oil or gas since Alaska became a state some 60 years ago.

You might be thinking, “But what about the environment? If we let people drill on their own land, won’t they trash it?” This land is their life. The homesteaders love their land more than anyone. They and their heirs know the tremendous sacrifice and effort they had to put in to get this land. It is preposterous to say they don’t care about what happens to their land.

This writer believes that the current elected governmental officials are trying to do their best to restore equity back to the individual citizens of Alaska. We just need to make sure they do the right thing by lowering the bonding requirements so that individual Alaskans can be capable to rightfully explore for oil or gas on their own property.

Please again carefully remember, it is only when the oil or gas has come to the surface of the homestead can any homesteader be able to convert this produced oil and gas to cash-in-hand, and be deposited in the homesteader’s own bank account.

The state should be compelled to disclose all its findings for these drastic measures penalizing and depriving pre-statehood homesteaders of the option to convert any or all of their oil and gas beneath their pre-statehood homestead to the homesteader’s ownership.

Jim White

[email protected]

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